One of Namibia’s development objectives is to reduce the costs of cross-border trade and to create a more conducive investment environment. However, international competitiveness rankings suggest the country still has some way to go in this respect.
Namibia ranks 138 out of 190 countries in the Doing Business (DB) 2020 report, which is the third poorest performance for the country of all indicators used to compile the DB index, after registering property and starting a business.
According to the Private Sector Development Survey (PSDS) 2019/20, Namibia relies on imports for most of the consumer and producer goods and on exports of raw materials and processed goods to regional and international markets. Furthermore, one of the country’s main development objectives is to become the logistic hub for the region, which resulted in substantial investment into transport infrastructure including the expansion of the Walvis Bay harbour. Hence, smooth cross-border procedures are essential to achieving this development objective.
Border and documentary compliance hours and costs for exports are way above Southern African Customs Union (SACU) averages. The country’s ratings in the Global Competitiveness Report (GCR) is lightly more positive, reads the PSDS. Namibia ranks 67 out of 141 countries in terms of border clearance efficiency, putting the country just within the first 50%. The ratings of trade tariffs (rank 81), the complexity of tariffs (90), and the prevalence of non-tariff barriers (93), however, require more attention, in particular since there has been a deterioration in the last two indicators. The issue of trade tariffs and tariff complexities can only be addressed within SACU.
Because of the significance of the cross-border operations, the PSD included two questions referring to border procedures on the Namibian and the foreign side of the border. Trading across borders is linked to the size of firms. On average, 70% of the respondents do not trade across borders with the share being highest for micro-companies (80%) and lowest for large companies (17%). The majority of small firms (55%) are not trading across borders, while it is a minority of medium-sized enterprises (45%). A larger share of cosmetics (60%) and metal fabrication (70%) companies were involved in trade than of other manufacturing firms (40%).
Border procedures on the Namibian side of the border have improved over the years. “Applying our scale of -2 (great hindrance) to +2 (no hindrance at all) the average rating was 0.00 compared to -0.69 in 2012. Business people from medium (0.12) and micro (0.09) firms provided a slightly positive rating, while in particular large firms (-0.40) seemingly have some concerns,” reads the survey.
Respondents from small enterprises provided also a slightly negative rating (-0.08). In general, manufacturing businesses (0.37) have a more positive view of the border procedures than other industries.